–
–
Will you offer us a hand? Every gift, regardless of size, fuels our future.
Your critical contribution enables us to maintain our independence from shareholders or wealthy owners, allowing us to keep up reporting without bias. It means we can continue to make Jewish Business News available to everyone.
You can support us for as little as $1 via PayPal at office@jewishbusinessnews.com.
Thank you.
388 -390 Greenwich Street New York
Citigroup, one the world’s premier banking groups, just signed a leasing deal with New York commercial real estate developer SL Green Realty, to consolidate its entire global corporate headquarters at 388 and 390 Greenwich St. in lower Manhattan. The complex of two buildings is a 2.6 million square foot development SL Green currently owns with a partner in the Tribeca district, just to the north of the World Trade Center. It consists of a 39 storey tower and a connected 8 storey building beside it.
In doing so Citigroup will finally be moving out of its long-time mid-town headquarters at 399 Park Avenue. Citigroup had at one time owned the Greenwich St. complex itself. It then sold it in 2007, in the thick of the financial crisis that had commenced with bursting of the US housing bubble, for almost US$1.6 billion to a joint venture between SL Green and Ivanhoé Cambridge, the real estate arm of the Quebec pension fund La Caisse de dépôt. Sl Green today owns 50.6% of the joint venture.
Afterwards Citigroup remained on the hook as tenants for the entire space, and still locate their trading operations there.
By renewing its lease now and deciding to move its entire headquarters there as well, Citigroup settles the question of where to put itself for the long term. It had also been shopping other prestige locations, including one of the still to be built new towers at the World Trade Center, and has now decided on this solution, as a cheaper and quicker alternative. A planned massive new development a little further north still, at Hudson Yards, by the Related Companies was apparently also on their list, but would have taken even longer to bring to fruition.
SL Green will no doubt be quite relieved, as if they had lost the tenancy it would have left a very large hole in their commercial leasing operations – even for a company of their size, with 24 million square feet of ownership interests in Manhattan office space in their portfolio.
SL Green indicates that it signed an agreement with Citigroup which now extends their leases to the end of calendar 2035. The agreement also includes an option for Citigroup to actually buy the properties back again, during the period from December 1, 2017 through December 31, 2020. The option price for the purchase may be for US$2 billion, according to Crains New York. The lease extensions are triple net, which simply means that in economic terms the landlord only has to worry about collecting his rents and covering his mortgage, as the tenant is responsible for reimbursing all operating costs of the property, including real estate taxes.
Citigroup will now invest up to US$1 billion in a massive upgrading of the property, which was built in the late 1990’s and is likely now a little tired, before it is fit for its head office to arrive at the complex. Presumably Citigroup will also shuffle reduced levels of existing staff around while it does so. To rebuild the trading room alone, and introduce the latest in technology, will in itself be a major undertaking. Citigroup inherited the complex at 388-390 Greenwich St. originally from the Travelers Group when it bought the insurance company in 1998, at the height of the expansionary theory of universal banking then in vogue, and since significantly discredited.
Marc Holliday, who is the Chief Executive Officer of SL Green Realty Corp said on announcing the transaction, with perfect sincerity, “We worked tirelessly to structure a transaction that is advantageous to all parties, and we are extremely pleased that Citi has extended its long-term commitment to Downtown Manhattan, “…”Citi is one of the world’s great financial institutions. SL Green has enjoyed being its largest landlord and we are pleased to continue this strong and highly valued relationship.”
Daniel Fournier, who is the Chairman and CEO of Ivanhoé Cambridge is obviously very happy with the result as well, saying, “We congratulate our partner SL Green on the closing of this major transaction which re-affirms a long-standing relationship with one of the world’s premier financial institutions and assures that the property will maintain its status as one of the leading buildings of New York”.
–
About SL Green
SL Green is New York’s largest commercial office landlord and the only fully integrated, self-managed, self-administered, publicly traded Real Estate Investment Trust (REIT), primarily focused on owning and operating office buildings in Manhattan.
The company has interests in 89 Manhattan properties totaling over 42 million square feet, including ownership interests in properties with almost 24 million square feet of commercial space and debt and preferred equity investments secured by properties with another almost 15 million square feet of space.
In addition SL Green holds ownership interests in properties totaling over 5 million square feet in New York’s surrounding suburban areas, and has ownership interests in 28 properties totaling 3.7 million square feet in southern California.
About Stephen Green
Stephen L. Green, who is 75, lived in Brooklyn until he was ten years old, when his family moved to Long Island. His father was a lawyer and apartment landlord. His mother was a public school teacher. He has one brother Mark, seven years his junior.
Green received a BA from Hartwick College and graduated from Law School at Boston College in 1962. He subsequently worked as an attorney for several years before gravitating towards entrepreneurship and eventually to real estate, culminating in his founding of SL Green Properties in 1980.
When the New York office market boomed in the mid 1990’s, Stephen Green formed SL Green Realty as the first public REIT to focus solely on New York City, and has since aggressively expanded its portfolio and built up the company to its present stature.
As a first rate squash player Green participated in both the 1985 and 1989 Maccabiah Games in Israel, and in 1985 actually won the bronze medal in squash. He endows the SL Green National Open Squash Championships for US Squash.
Stephen Green is married to Nancy Peck who runs Nancy Peck & Co. He has three sons, Daniel, Gary, and Scott Green. Nancy has a son, Jonathan Peck.
–
